what is the GCCIA and can it benefit Iraq?

US President Joe Biden on Friday welcomed an initiative to offer Iraq with electrical energy from GCC nations.

Agreements to attach the electrical energy networks of GCC states to Iraq’s grid are to be signed on the sidelines of the Jeddah Safety and Improvement Summit on Saturday, based on a US assertion launched after Mr Biden’s conferences with Saudi Arabia’s King Salman and Crown Prince Mohammed bin Salman in Jeddah.

The agreements are anticipated to advance plans to produce Iraq by way of the GCC Interconnection Authority (GCCIA), an thought first raised in late 2018 and that started to take form the next yr.

What’s the GCCIA?

The GCC, comprising Bahrain, the UAE, Kuwait, Saudi Arabia, Qatar and Oman, commissioned a research in 1986 on the thought of connecting electrical energy grids throughout the Center East.

Subsequent research laid out a highway map for this actuality and in 2001, the GCCIA was fashioned. By 2011, all GCC nations have been related, apart from Oman. It was related the next yr.

The concept that nations can share electrical energy just isn’t new, particularly in a buying and selling and co-operation bloc such because the GCC or the EU.

The EU, for instance, has a goal of 15 per cent interconnection by 2030 ― in different phrases, 15 per cent of energy generated by member states may be exported to different members, if want be.

In line with the EU, this may cut back the chance of blackouts in any related nation and reduces the necessity for brand spanking new energy stations.

It has additionally led to an electrical energy market inside the bloc. Germany, for instance, exports electrical energy to Poland, which is attempting to cut back reliance on extra polluting thermal energy. France has grow to be an exporter resulting from its excessive put in capability of nuclear energy, which produces a surplus.

That’s the place vitality powerhouses similar to Saudi Arabia enter the image — the dominion has an put in capability of over 80 gigawatts, nearly 4 occasions the facility presently obtainable to Iraq.

Talking at a regional enterprise discussion board final month, GCCIA chief government Ahmed Ali Al Ebrahim mentioned the authority’s ambition goes a lot additional afield.

“We’re connecting GCC with Egypt, Jordan and Iraq to have a pan-Arab market. The sector wants grids, interconnectivity, and know-how,” he mentioned.

Why does Iraq should be a part of the GCCIA?

In contrast to the GCC nations, Iraq’s economic system — together with its capability to supply electrical energy — has been devastated by a long time of sanctions, dictatorship, the US-led invasion and its aftermath.

The nation has additionally skilled issues associated to the functioning of its vitality establishments, particularly corruption. Electrical energy theft — unlawful connections by the poorest communities — and non-payment of closely subsidised payments, imply that the Ministry of Electrical energy has bled cash, slicing into funding for brand spanking new energy provides.

Funding wanted to restore the nation’s huge and ageing grid, which is so inefficient as much as half of generated energy may be misplaced earlier than reaching communities, has additionally been gradual in coming, as successive governments have prioritised safety spending and authorities salaries quite than investing in infrastructure.

Iraq has had some modest success bringing energy on-line. Electrical energy technology in 2003, the yr of the US-led invasion, was barely seven gigawatts, which quickly fell to round 4.2 gigawatts because the nation collapsed into sectarian violence. Energy technology is now 21 gigawatts.

However demand has soared over that interval — rising at greater than seven per cent a yr — and peak summer time demand is now near 30 gigawatts. When these demand peaks occur, Iraq suffers blackouts, usually in searing temperatures.

Iraq’s demand might even be rising quicker than beforehand thought, with Electrical energy Minister Adil Karim not too long ago warning that year-on-year rises could possibly be 20 per cent.

How can Iraq profit from the GCCIA?

Iraq’s Ministry of Electrical energy signed a framework settlement with the GCCIA in September 2019, for the availability of 0.5 gigawatts by way of Kuwait to Basra, with the potential for elevating it to 1.8 gigawatts.

The operation of the primary 0.5 gigawatts provide is sort of on-line, delayed by Covid-19 and negotiations on the tariff Iraq can pay.

Even contemplating so known as “technical losses” inside Basra because of the situation of the grid, the utmost export of 1.8 gigawatts could be a considerable quantity of energy for the disaster hit metropolis, which has an electrical energy demand of round three to 4 gigawatts.

“We knew very properly upfront, that any megawatts that may attain Iraq should not going to exceed greater than 500MW, most 1,000MW, however we deliberate for a better ceiling of 1.8 gigawatts,” says Luay Al Khatteeb, Iraq’s former minister of electrical energy.

Moreover, Iraq has up to now been partially depending on unstable electrical energy and gasoline imports from Iran — Iranian gasoline alone accounts for as much as 30 per cent of Iraq’s energy technology.

However Iran’s personal home provides are unstable and it has struggled to produce sufficient gasoline throughout its personal peak summer time and winter demand, partly resulting from an absence of funding in gasoline manufacturing and infrastructure.

This implies higher connectivity with the remainder of the Center East might assist Iraq in an emergency — both throughout summer time demand spikes or when confronted with technical issues, similar to in August 2019 when a gasoline pipeline feeding Hartha energy station in Basra exploded, placing electrical energy manufacturing in danger till it was mounted.

“The entire train of interconnectivity has three functions,” Mr Al Khatteeb says.

“Primary is to have a extra secure nationwide grid by growing interconnection with a regional grid. So, it is good to have a extra secure nationwide grid on our aspect, in case we’d like additional provide.

“Quantity two is to create a utility market to ‘wheel’ electrical energy from one nation to a different in occasions of surplus capability.

“And quantity three is to diversify the vitality provide and never depend on one nation.”

“Wheeling” is the method of shifting energy throughout nationwide boundaries.

To that finish, successive Iraqi governments have pursued grid interconnection plans, not too long ago with Jordan and Turkey. Within the latter case, Turkey is to produce 0.5 gigawatts which is meant to learn Iraq’s northern governorates, whereas Jordan and Iraq signed a deal in September 2020 for 0.15 gigawatts of exports.

How can Iraq increase its electrical energy provide?

One of the vital essential issues Iraq can do is reform tariffs to recoup losses within the sector — basically eradicating subsidies — and making a predictable and secure surroundings for energy corporations to speculate.

“Iraq must open the vitality market to overseas buyers and type out the losses problem. A whole refurbishment of the sector might resolve the electrical energy downside, in any other case it should proceed for one more 10 to twenty years,” says Harry Istepanian, an vitality advisor who has labored extensively in Iraq and Kuwait.

Moreover, Iraq must allocate extra capital expenditure to the sector utilizing its document oil income which are topping $10 billion per 30 days, as a substitute of prioritising salaries throughout authorities ministries.

Whereas tariff reform has fallen by the wayside — it’s thought-about a politically unpopular transfer, Iraq has managed to draw overseas funding to construct energy stations, with long-term gamers in Iraq’s vitality sector together with US firm GE and Germany’s Siemens.

Extra not too long ago, contracts to construct energy stations have been signed with the UAE’s Masdar and Saudi Arabia’s ACWA Energy.

Up to date: July 16, 2022, 12:39 AM